Getting to know Kevin Warsh... What he says the Fed will do... Halfway through 2026... People are loving buying the dip... Another late 1990s comparison... Mailbag: A 250-year-old tree meets its demise...
The new guy has thoughts...
Over in Portugal, central bankers gathered this week for the European Central Bank annual forum. New Federal Reserve Chair Kevin Warsh was among them...
And, today, a panel discussion marked Warsh's first public appearance since leading his first Fed policy meeting last month. In some ways, Warsh sounded a lot like his predecessor, Jerome Powell.
Warsh said the Fed is sticking to its 2% inflation target, and anyone who thinks otherwise is going to be "disappointed." He was asked if that could include President Donald Trump, a fan of lower interest rates and a loud critic of Powell for not cutting rates the past two years.
"'We have been an independent central bank for a long time," Warsh said. "We are going to be an independent central bank at this moment, and you will see no changes on that."
What a new-looking Fed could do...
This morning, Warsh also signaled what changes we could see from the Fed... including how the central bank goes about its business and interacts with the market.
After his first meeting as Fed chair, Warsh talked about the various task forces he's putting together to evaluate U.S. central bank policy.
Today, he continued that discussion, saying within a year, it's his "aspiration" for the Fed to start using real-time data to make monetary policy. That's instead of the backward-looking, economic numbers the Fed uses now, which can be significantly flawed.
Frankly, that's something I (Corey McLaughlin) have been calling for since I started writing about Fed policy years ago. By the time the Fed actually makes a rate move, it's based on jobs or inflation data that is months old – at the earliest. Surely, there is a better way...
Change at the top – during the AI boom (which is "exponential... hyper Moore's Law stuff," Warsh said) – just might be the trigger for a new-looking Fed. Warsh continued...
We're no longer going to have to rely solely on data that we get from government agencies with mismeasurement problems that have surveys that are no longer relevant...
Many of these indicators are echoes of history. We need indicators that tell us what things are when we look out our window today.
As for what he sees right now, Warsh said "inflation risks have come down." He was referring to the past few weeks, with oil flows being unlocked in the Persian Gulf. More on the war in Iran in a moment...
Elsewhere, some things never change...
We're officially at the halfway point of 2026, which – for us – means it's time to reflect on first-half trends and think about what might come in the second part of the year. We'll get into our traditional mid-year review next week.
In the meantime, though, we have a couple of notes to pass along, which suggest a strongly bullish flavor for the market as July begins...
1. Buying the dip has never been more popular...
A first-half report from Citadel Securities shows that not only is "buying the dip" – putting money to work on any pullback in the market – popular again, but the behavior has "reached a new extreme." From the report...
Retail investors purchased nearly 3.5x the average daily amount on SPX [S&P 500 Index] down days during the first half of 2026, the strongest buy-the-dip behavior in our dataset. Even on SPX rallies, they continued to buy nearly 1.5x the daily average.
2. Greed is winning...
Momentum stocks, in broad terms, are those experiencing the best, sustained rises in price (regardless of fundamentals) relative to other stocks in the market.
Well, as of last month, this group of stocks – as measured by the S&P 500 Momentum Index – have outperformed the S&P 500 by around 120% on a rolling three-year basis, as the Daily Chartbook newsletter pointed out.
In other words, the best-performing stocks – many of which come from the semiconductor sector and are tied to the AI boom – are beating the "rest" by a difference last seen in the late 1990s... during the dot-com boom.
In "average" periods when momentum stocks outperform the market, it's a sign that a downturn could be ahead. When it's extreme like this, you probably want to pay even more attention. That said, things can still get crazier before momentum turns the other way.
Bottoms up...
As we've mentioned over the past few days, it looks like the recent pullback in mega-cap tech might be over. The Magnificent Seven, on an equally weighted basis, were down about 10% through the first three weeks of June – an overdue breather.
But since last Thursday's close, the Roundhill Magnificent Seven Fund (MAGS) is up about 8%. The dip has been bought, and things are setting up for perhaps an even more explosive move higher.
That's according to Ten Stock Trader editor Greg Diamond, who earlier this week said he was expecting stocks like Nvidia (NVDA), Alphabet (GOOGL), and Amazon (AMZN) to find a bottom. As Greg wrote...
This is the most important part... because this rally could form a euphoric bubble. Future gains could dwarf the gains we've already seen in the market.
Markets can be irrational for longer than you think. And things could get downright crazy.
Greg doesn't necessarily care about the "why" as he puts his technical analysis to work, but he did say that, with some inflation expectations coming down, the Fed "might not have to raise interest rates to combat worsening inflation." That could be a catalyst for higher stock and bond prices.
That's part of why we listened to what Warsh had to say in his second big public appearance as Fed chair. Despite the party line that he wants to stomp out high inflation, he didn't hesitate to signal that the worst impacts from the war in Iran may be over.
Though the market isn't listening – yet.
Federal-funds futures traders are still putting a 65% probability of a Fed rate hike by the central bank's September meeting, and more than 80% odds on it happening by the end of the year.
But if the pace of inflation comes down, and Warsh is more inclined to use "real time" data in his own decision-making – even if the practice is not formally adopted by the Fed's policy-making committee until much later – there's space for market rate-hike expectations to dwindle.
That will likely fuel more bullish sentiment, and there's plenty out there already.
New 52-week highs (as of 6/30/26): Altius Minerals (ALS.TO), Applied Materials (AMAT), Advanced Micro Devices (AMD), ASML (ASML), GE Vernova (GEV), iShares Biotechnology Fund (IBB), Palo Alto Networks (PANW), Roivant Sciences (ROIV), Snap-on (SNA), Solstice Advanced Materials (SOLS), Taiwan Semiconductor Manufacturing (TSM), Twist Bioscience (TWST), and State Street Industrial Select Sector SPDR Fund (XLI).
In today's mailbag, thoughts on "Project Hamilton," which we wrote about yesterday... and a report on a pine tree that was as old as America itself... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Corey, after tuning in to watch Dan's infomercial about the Hamilton Project, my mind went directly to a quote that my late father-in-law (who was the vice president of a food broker company in southwestern Pennsylvania) had framed on his office wall behind him.
"The quote read, 'Always remember the Golden Rule, the man with the gold makes the rules.'
"I find that kind of prescient to what we might be witnessing on July 4th this weekend." – Flex Alliance Member Kenneth S.
"If Dan thinks it's so important, why doesn't he just say what the deal is? I'm an Alliance member and this is just some hype piece to get people to buy something. Sad." – Stansberry Alliance member Don G.
Corey McLaughlin comment: Don, noted. Consideration of your view is why we included a direct link to all the information about "Project Hamilton" and Dan's related recommendations in yesterday's Digest.
Again, Alliance members and existing Extreme Value subscribers can find everything – in three new special reports – here.
If you don't have access and want to learn about what Dan is calling potentially the "biggest trade of all time" – one tied to a shocking White House announcement that could come as soon as America's 250th birthday this weekend, click here to get more details.
"This has nothing to do with the stock market. I live in East Texas. There is a landowner close to me that has the Guinness Book of Records for the tallest and oldest pine tree. It was 14'6" in diameter and over 150' tall. Beetles killed it and he had to cut it down. The tree is 250 years old. The owner got the lower portions for his own use. I have two sections from app 25' up. They are 5 1/2" thick x 6' in diameter. I am going to make coffee tables out of both. It is amazing to me that this tree sprouted in 1776." – Subscriber S.R.S.
McLaughlin comment: Pretty amazing, indeed. And I thought the 90-year-old white oak on my property that was in decline – which a skilled crew recently took down with the help of a crane – was old and tall...
All the best,
Corey McLaughlin with Nick Koziol
Baltimore, Maryland
July 1, 2026
